Volkswagen India: Das Auto Digitally SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Volkswagen India: Das Auto Digitally
In 2011, Volkswagen (VW) India made digital marketing a significant aspect of its marketing. It set an objective of becoming the buzziest brand online and ''Innovation'' was identified as the common thread across all digital mediums. When VW was launched, people were unaware of the brand and social media was also nascent, thus the focus was on display ads. VW spent 50% of its digital marketing budget on display ads, 30% on paid search and 20% on social media. VW advertised on reputed, influential and high traffic news and information portals and on car portals/review sites.VW understood the customer funnel and worked backwards on planning ad inventories. ''Cost per lead'' was the key metric to measure any campaign performance. After brand awareness was built through display ads, VW invested in search engine marketing for organic and paid searches which led to ''Planet Volkswagen,''(PV). PV represented VW activities on a revolving circular globe with each section designed around a specific theme. PV received good response; however, owing to recession in industry in 2012, marketing had to lead to test drives - hence efforts towards PV were reduced. Two campaigns were launched one after other towards increasing leads. VW launched New Jetta in 2011 with a social media campaign called ''#AnythingforJetta''. It revolved around the concept that Jetta gave so much driving pleasure that people would do anything to own Jetta. Twitter was chosen for the campaign to get instant responses and to tap into specific customer segment. VW prepared video content showing people doing quirky stuff for Jetta. Full front page ads were published in leading newspapers, which gave the campaign a big push. #AnythingforJetta became the No. 1 trending topic on Twitter and it also led to 15% increase in Twitter users in India. "Jetta TSI YouTube Test Drive" campaign was launched in 2012, which took test drives drives from roads to viewers' desktops, tablets, and mobiles. The idea behind the YouTube test drive was to engage users and let them ask any questions about the car just as they would in a real world test-drive. The campaign, reached 21 million unique users against planned reach of 10 million. The challenge facing VW was how to break the clutter and engage fans to generate positive word-of-mouth.
Swot Analysis of "Volkswagen India: Das Auto Digitally" written by Seema Gupta includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Vw Jetta facing as an external strategic factors. Some of the topics covered in Volkswagen India: Das Auto Digitally case study are - Strategic Management Strategies, Social platforms and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Volkswagen India: Das Auto Digitally casestudy better are - – increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, increasing household debt because of falling income levels,
there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Volkswagen India: Das Auto Digitally
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Volkswagen India: Das Auto Digitally case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Vw Jetta, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Vw Jetta operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Volkswagen India: Das Auto Digitally can be done for the following purposes –
1. Strategic planning using facts provided in Volkswagen India: Das Auto Digitally case study
2. Improving business portfolio management of Vw Jetta
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Vw Jetta
Strengths Volkswagen India: Das Auto Digitally | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Vw Jetta in Volkswagen India: Das Auto Digitally Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Volkswagen India: Das Auto Digitally Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to recruit top talent
– Vw Jetta is one of the leading recruiters in the industry. Managers in the Volkswagen India: Das Auto Digitally are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Vw Jetta in the sector have low bargaining power. Volkswagen India: Das Auto Digitally has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Vw Jetta to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Vw Jetta digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Vw Jetta has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Vw Jetta has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Vw Jetta to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Vw Jetta are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Training and development
– Vw Jetta has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Volkswagen India: Das Auto Digitally Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Diverse revenue streams
– Vw Jetta is present in almost all the verticals within the industry. This has provided firm in Volkswagen India: Das Auto Digitally case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Vw Jetta has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Volkswagen India: Das Auto Digitally HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Vw Jetta in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Vw Jetta has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Vw Jetta has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Strong track record of project management
– Vw Jetta is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses Volkswagen India: Das Auto Digitally | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Volkswagen India: Das Auto Digitally are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Volkswagen India: Das Auto Digitally HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Vw Jetta has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Vw Jetta needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Capital Spending Reduction
– Even during the low interest decade, Vw Jetta has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High bargaining power of channel partners
– Because of the regulatory requirements, Seema Gupta suggests that, Vw Jetta is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow decision making process
– As mentioned earlier in the report, Vw Jetta has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Vw Jetta even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Low market penetration in new markets
– Outside its home market of Vw Jetta, firm in the HBR case study Volkswagen India: Das Auto Digitally needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Vw Jetta is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Volkswagen India: Das Auto Digitally can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Vw Jetta has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Lack of clear differentiation of Vw Jetta products
– To increase the profitability and margins on the products, Vw Jetta needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Vw Jetta supply chain. Even after few cautionary changes mentioned in the HBR case study - Volkswagen India: Das Auto Digitally, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Vw Jetta vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Volkswagen India: Das Auto Digitally, is just above the industry average. Vw Jetta needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Volkswagen India: Das Auto Digitally | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Volkswagen India: Das Auto Digitally are -
Manufacturing automation
– Vw Jetta can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Better consumer reach
– The expansion of the 5G network will help Vw Jetta to increase its market reach. Vw Jetta will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Vw Jetta in the consumer business. Now Vw Jetta can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Vw Jetta can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Vw Jetta can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Vw Jetta is facing challenges because of the dominance of functional experts in the organization. Volkswagen India: Das Auto Digitally case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Vw Jetta to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Vw Jetta can use these opportunities to build new business models that can help the communities that Vw Jetta operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Vw Jetta can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Vw Jetta can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Volkswagen India: Das Auto Digitally, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Vw Jetta can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Low interest rates
– Even though inflation is raising its head in most developed economies, Vw Jetta can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Vw Jetta in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Vw Jetta has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Volkswagen India: Das Auto Digitally - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Vw Jetta to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Volkswagen India: Das Auto Digitally External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Volkswagen India: Das Auto Digitally are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Vw Jetta with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Vw Jetta can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High dependence on third party suppliers
– Vw Jetta high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Shortening product life cycle
– it is one of the major threat that Vw Jetta is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Volkswagen India: Das Auto Digitally, Vw Jetta may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Vw Jetta.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Vw Jetta can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Volkswagen India: Das Auto Digitally .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Vw Jetta will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Vw Jetta demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Environmental challenges
– Vw Jetta needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Vw Jetta can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing wage structure of Vw Jetta
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Vw Jetta.
Weighted SWOT Analysis of Volkswagen India: Das Auto Digitally Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Volkswagen India: Das Auto Digitally needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Volkswagen India: Das Auto Digitally is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Volkswagen India: Das Auto Digitally is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Volkswagen India: Das Auto Digitally is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Vw Jetta needs to make to build a sustainable competitive advantage.
